Promissory Notes

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$14,000,000.00 Due May 30, 2004
PROMISSORY NOTE
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FOR VALUE RECEIVED, Net2Phone, Inc., a Delaware corporation ("Maker"), hereby
promises to pay to the order of IDT Corporation ("Payee") in 60 equal monthly
installments, the principal amount of Fourteen Million Dollars ($14,000,000.00)
with interest self amortizing on the outstanding principal amount from May 30,
1999 at a rate of 9% per annum. Notwithstanding the foregoing, Seven Million
Dollars ($7,000,000.00) of principal will be paid by Maker within ten (10) days
of the consummation of Maker's proposed initial public offering.
All payments hereunder shall be made by delivery to Payee of checks
payable to the order of Payee or by wire transfer.
Maker may, at its option, prepay this Note in whole or in part, together
with accrued interest on the principal amount being prepaid, at any time or from
time to time without penalty or premium.
If any one or more of the following events (hereinafter an "Event of
Default") shall occur, for any reason whatsoever:
(a) default in any payment of principal of this Note when due and the
continuance of such default for a period of ten days;
(b) default in any payment of interest on this Note when due and
continuance of such default for a period of ten days; and
(c) financial difficulties of Maker as evidenced by the occurrence of
any of the following events under the laws of the United States or any state,
territory or possession thereof: (i) the failure, or acknowledgement in writing
of its inability, to pay its debts as they become due; (ii) the commencement of
a voluntary case in bankruptcy or any other action or proceeding for any other
relief under any law affecting creditors' rights generally or the seeking of an
appointment of a trustee, receiver, liquidator, custodian or other similar
official for it or any substantial part of its properties; (iii) consent by
answer or otherwise to an order for relief against it in an involuntary case in
bankruptcy or to the commencement of any other such action or proceeding or to
any such appointment; (iv) the entry against it of an order for relief in an
involuntary case in bankruptcy; (v) the commencement against it in an
involuntary case in bankruptcy or any other such action or proceeding, if such
case or other action or proceeding shall not be dismissed or stayed within
thirty days following the commencement thereof or if any such dismissal or stay
shall fail to remain in effect; or (vi) the appointment of a trustee, receiver,
liquidator, custodian or other similar official for it or any substantial
portion of its properties; then, and in each and every case, the Payee, during
the continuance of such Event of Default, may, upon giving written notice to the
Maker, declare the then outstanding principal amount of
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this Note and accrued interest thereon to be, and whereupon they shall become,
immediately due and payable. Interest shall accrue hereunder during the
continuance of an Event of Default.
If an Event of Default should occur, Maker agrees to pay to the Payee
all expenses, including reasonable attorneys' fees, incurred by the Payee in
enforcing and collecting this Note (whether pursuant to acceleration or
otherwise), whether before or after maturity.
No delay or failure on the part of the Payee of this Note in exercising
any option, power, right or remedy shall operate as a waiver thereof; nor shall
any single or partial exercise of any option, power, right or remedy preclude
other or further exercise thereof or exercise of any other option, or remedy
shall be a waiver of any default. No waiver by the Payee of any right hereunder
or of any default by Maker shall be binding upon the Payee unless in writing,
and no failure by the Payee in exercising any right hereunder, and no waiver of
any default of the Payee shall operate as a waiver of any other or further
exercise of such right or of any further default. Maker waives demand, notice
and protest in any defense by reason of extension of time for payment or other
indulgence granted by the holder hereof.
This Note shall be binding upon the successors and assigns of Maker and
shall inure to the benefit of Payee and its successors and assigns. This Note
shall be governed by the internal laws of the State of New York without giving
effect the principles of conflicts of law.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
12th day of May, 1999.
NET2PHONE, INC.
By: /s/ Howard S. Balter
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Howard S. Balter
Chief Executive Officer